The tax changes envisage bringing labor taxes closer to the Lithuanian and Estonian levels, but at the same time restricting micro-enterprise and other alternative tax regimes. Until now, those working in them have been allowed to pay less in taxes.
The Ministry of Finance proposes to return to the idea of minimum social contributions, which was almost introduced in 2016. Irrespective of the tax regime, a worker should pay at least € 170 in social tax.
“Months [Covid-19] the crisis revealed obvious problems with the payment of social security contributions to certain groups of workers. This was one of the reasons why the ministry promoted this minimum social contribution, ”explains Ints Dalderis (JV), Adviser to the Minister of Finance.
According to the State Revenue Service, social contributions for every third person employed in the country are now lower than the minimum wage, which means that the tax will increase for this third.
Most of the most vulnerable workers work under the general tax regime. These could be, for example, part-time workers.
Social policy expert Ruta Zilvere believes that it is right to balance different tax regimes by approximating social contribution rates, but the reverse is to make paying a higher tax than the worker earns.
“However, there are people – low-skilled or low-paid – who need part-time work because there is no full-time job nearby, which is quite common in the countryside, especially in Latgale, or a person just needs extra work at some point in their lives. work, ”explains Zilvere.
If social contributions have to be paid from a fixed minimum, then the tax burden in the low-wage sector actually becomes regressive, ie these workers pay a higher percentage of their income than the better paid.
Zilvere predicts that such jobs will disappear or become unregistered if the tax is higher than earned at work: are we trying to push these people out of the labor market and push these jobs out? ”
Representatives of the coalition parties are pushing for change, saying that they care about a low-paid future.
Atis Zakatistovs (KPV LV), Parliamentary Secretary of the Ministry of Finance, mentions that workers should also fight for their rights, but in this case the government wants to ensure equal conditions for everyone.
“Currently, those who pay social security, they support those who do not. You are, of course, saying that there is a cobbler, I do not know, in Aluksne, who will be ill. Unfortunately, I can’t say anything about the cobbler in Aluksne, because the state creates the same tax system for everyone, which applies to the country as a whole, ”says Zakatistovs.
Politicians do not give a clear answer on how to pay the required social tax if the income in casual work is not so high.
“In our neighboring countries, which have also recently introduced such things, their jobs have been consolidated so that each job is worth enough so that his or her minimum wage can be paid. It is already a matter of purely work organization, ”says Dalderis.
“I really hope that the government will have some solutions,” Mārtiņš Bondars (A / P), Chairman of the Budget and Finance Committee of the Saeima, is responsible for the social contributions paid to the land and adds that it is difficult for him to judge until the changes are submitted to the Saeima.
The Ministry of Welfare is still thinking about who should not be allowed to pay the minimum monthly social tax of 170 euros. It is almost certain that students, pensioners and prisoners will escape.
There is still no full consensus among government parties on all tax changes. There is confusion, for example, about family support measures. The New Conservative Party has only recently begun to talk about them, abandoning the non-taxable minimum of EUR 500 promised in the elections.
“We do not yet see anything for families with children [orientētu], and it will have to be in the budget, even if it means that the budget deficit is not 3.9%, but 4.1%, ”says Saeima deputy Gatis Eglītis (JKP).
The discussed increase of the state family benefit could require more than 80 million euros, notes Zakatistovs. Therefore, it is still under discussion whether or not to reimburse these costs by waiving any income tax relief.
The Fiscal Discipline Council, which oversees that the state does not spend much more than it collects in taxes, notes that care must be taken in growing public debt. It has already risen from a third to 50% of GDP.
“This does not mean that we are calling for an increase in debt at the moment, we just have to keep in mind that state aid, which is formed at the expense of the deficit, must be invested effectively,” says Inna Šteinbuka, head of the Fiscal Discipline Council.
As regards the disadvantages of the new tax proposal, the Fiscal Discipline Council considers that it does not increase budget revenues as a whole, as in previous reforms. And in this respect Latvia lags behind the neighboring countries.
